Tom Luongo — Russia’s Exports Continue to Defy Sanctions

Putin was not joking about sanctions being a blessing in disguise, since Russia would have found it difficult to restructure otherwise. Necessity is the mother of invention.

Gold, Goats 'n Guns
Russia’s Exports Continue to Defy Sanctions

Tom Luongo

Elena Popina — Why Investors Are Loading Up on Rubles

Currency gained most in emerging markets since January low

Bloomberg
Why Investors Are Loading Up on Rubles

Elena Popina

Also

Reuters
Investors starting to show interest in Russia again: Credit Suisse
Polina Devitt and Katya Golubkova

Alexander Mercouris — In Upbeat Mood, Putin Reviews the Economy with his Team

More upside in the ruble than downside? Mercouris thinks so.

In the past I have speculated that the point when the rouble will start to decouple from oil prices will be when the total foreign debt that is actually due falls below the amount of Russia’s foreign exchange reserves held by the Central Bank (currently roughly $370 billion).

All the evidence suggests that that point is fast approaching, and if is true that only half of the nominal amount of $515 billion of foreign debt is debt that is actually due, then that point may already have been passed - even it is not yet visible in the published figures.

Given that that is so, since it is very much in Russia’s interests to keep the rouble low in line with oil prices - to choke off imports to support to agriculture and industry and to keep the external trade balance in surplus at a time of low oil prices - I have come round to Jon Hellevig’s view that the Central Bank should cut interest rates without further delay.

Inflation is falling fast and - as Jon Hellevig says - in Russia it is not primarily a monetary phenomenon anyway.

Since inflation is falling fast and since there is no need to support the rouble - on the contrary an excessive rise in the rouble like the one last spring would actually do harm - there is no reason to keep interest rates high. All the high interest rates are now doing is prolonging the recession.

Unfortunately, if recent history is a guide, the Central Bank will once again err on the side of caution, and - spooked by the recent fall in the rouble and worries about further interest rate rises in the US - will decide to keep interest rates high at its next scheduled meeting at the end of January.
The day when interest rates are cut cannot however now be far off. Beyond a certain point not just economic logic but political pressure from business, the Duma and the government will make an interest rate cut inevitable.

Russia Insider
In Upbeat Mood, Putin Reviews the Economy with his Team
Alexander Mercouris

Econmatters — Russia Cuts Interest Rate As Economy Contracts

Bank of Russia forecast.

Econmatters
Russia Cuts Interest Rate As Economy Contracts

See also

Russia Insider
Russian Central Bank Slashes Interest Rate 

Alexander Mercouris

F. William Engdahl — Russia Gets Very Serious on De-dollarizing

Gold. 

Not as crazy as it sounds, actually. Asia is crazy about gold. This is looked upon not as innovation but as tradition.

New Eastern Outlook
Russia Gets Very Serious on De-dollarizing
F. William Engdahl

Constantin Gurdgiev — Ruble's Gains Are Convincing, But Risks Remain

The RUB became severely undervalued at 80 (USD/RUB). It has recovered remarkably well, more quickly than most watchers anticipated. But is it time for consolidation, or even pullback from overshoot?

The ruble is sensitive to the political situation, of course. Independently of that experts put the value at about 40-45 USD/RUB, whereas it is in the mid-fifty range now. However, the economic position of Russia is shifting structurally owing to the prodding of the political situation, and steps are being taken to cure Dutch disease of resource-export dependence by broadening and deepening the economy. In addition, Russia has become much more active globally, seeking new partners as well as deepening existing relationships, for example, with India.

Regarding the geopolitics and geostrategy, the conventional wisdom is that the US is engaged in a proxy war with Russia in Ukraine and hemming in Russia's near abroad. This is only tactical, however. The real situation is much larger.

Since the breakup of the USSR, Russia can no longer challenge US hegemony in the foreseeable future. But China can and is. The strategic situation is that the US engaged in a proxy war with China with Russia as the proxy. This will be the unfolding narrative of history for the next few decades at least.

The US has decided that it must act now instead of letting China get any stronger, putting it in a strong position to challenge the US and its allies, not necessarily for global hegemony at first, but to break the lock the US has had on the world since the end of the Cold War, a strategy put in place at the end of WWII.

So the US is not expected to take the political, economic and military pressure off Russia anytime soon. This figures significantly into how the value of the ruble is perceived in the market.

True Economics
Ruble's Gains Are Convincing, But Risks Remain
Constantin Gurdgiev

RT — Slumping ruble should push Russia to ‘live in new reality’ – Bank chief

The plunging ruble is a signal for the Russian economy to adapt to new conditions, Russia’s Central Bank Chair Elvira Nabiullina said, following the surprise midnight decision to hike the key interest rate to 17 percent.… 

“We must learn to live in a new reality, to focus more on our own resources to finance projects and give import substitution a chance,” the bank chief said in a televised address Tuesday.… 

Nabiullina said that the Central Bank has special tools not to restrict development and growth within Russia, citing finance of investment projects, and small and medium-sized business and commodity exports as target industries.

RT
Slumping ruble should push Russia to ‘live in new reality’ – Bank chief